Filing Your NJ Taxes: Go it Alone or Use a CPA?

Everyone knows April 15th is tax day. For months you’ll see the ads everywhere for tax filing services. If you’re reasonably good with numbers you may be wondering if you can handle filing your taxes yourself or if you should use an accountant. There are a lot of factors to consider so it’s best to know all of the options before you file.

 

When should you go it alone?

Filing taxes yourself is best when you’re taxes are fairly simple. If you are filing singly and taking the standard deduction your tax preparation will be fairly straightforward. However if you have dependents, student loan interest, a mortgage, or own a business you will want to itemize in order to get the maximum benefit. That can get complicated quickly. Certain itemizations can raise red flags for an IRS audit. In that case you will have been penny wise and pound foolish. You’ll have to hire a CPA to represent you in an audit in addition to back taxes and fees you’ll have to pay.

 

Not all accountants are created equal.

Anyone who studied accounting can call themselves an accountant. Your college roommate who took a few accounting courses is an accountant. Your cousin’s wife who read Accounting for Dummies is an accountant. Does that mean you should put your tax preparation in their hands?

 

You may think that going to an office like Jackson Hewitt or H&R Block means that you’re putting your taxes in the hands of professionals. The term ‘professionals’ is misleading. Their websites don’t even call their employees accountants or professionals, they call them ‘tax pros.’ Workers filing your taxes are trained on how to use accounting software, that’s it. Hiring one of these companies is hardly a step up from filing yourself using TurboTax.

 

An Enrolled Agent, or EA, is an accountant who has been certified by the IRS. To become an EA, several requirements must be met:

  • Must have a Preparer Tax Identification Number (PTIN), which must be renewed annually
  • Must achieve passing scores on all three parts of the Special Enrollment Examination (SEE) within two years
  • Apply for enrollment
  • Payment of enrollment fee
  • Pass a background check
  • Pass a suitability check of past tax filings
  • Renew EA certification every three years
  • Obtain continuing education after certification

An EA does not have to have a college education. When choosing an accountant to file your taxes, an EA will probably be more affordable than a CPA. An EA is also capable of legally representing you in the event of an audit.

 

A Certified Public Accountant, or CPA, must have a bachelor’s degree from an accredited college or university with 150 total semester hours. Of these, 24 must be in accounting and 24 in business. In order to be licensed in New Jersey, a candidate must pass the CPA exam and provide evidence of at least one year of experience working for a CPA. During that term, 25% of your time must be spent auditing and accounting and the remaining 75% on tax services. Maintaining a CPA license requires 120 hours of continuing professional education to be completed every three years including a New Jersey Law and Ethics course.

 

A CPA is the most well-educated and experienced person you can have handling your taxes. If you need help finding an NJCPA, Veitengruber Law has close relationships with CPAs with impeccable reputations. George can recommend a CPA that will handle your taxes with accuracy and honesty beyond reproach.

 

Who should use a CPA?

Anyone not taking the standard deduction should have their taxes prepared by a professional. When itemizing your taxes, a CPA can help you find deductions you might have missed, express concerns about possible red flags, and let you know about upcoming tax law changes for the new year that you can prepare for.

 

In the event of an audit, you’ll want a CPA on your side. They will have experience navigating an audit and won’t be intimidated by the IRS officials. They may even have worked with the IRS agent before on other cases and know what to expect.

 

While most tax returns could benefit from the eye of a CPA, these are some categories of filings that definitely should be itemized:

  • Buying or owning a home
  • Owning a rental property
  • Moving and moving expenses
  • Moving to a new state and filing 2 sets of taxes
  • Medical expenses and medically related travel
  • Owning a business
  • Working from home in a home office
  • Paying student loan interest

 

It’s best not to leave your tax returns to chance. Hiring a CPA for your filing is the best way to ensure you get the maximum benefit on your return.

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